The demand for artificial intelligence creates a powerful siphoning effect on infrastructure. Following the shortage and price increase of storage chips, CPU chips are also facing supply shortages.On February 6, foreign media reported that informed sources revealed that Intel and AMD have notified their Chinese customers of supply shortages for their server central processing units (CPUs). Intel also warned that future delivery times could extend up to six months.The media cited a knowledgeable source stating that the tight supply has led to an average price increase of over 10% for Intel server products in the Chinese market, although specific prices may vary due to customer contract terms. Two other informed sources indicated that the Chinese market accounts for over 20% of Intel's total revenue, and the supply of Intel's fourth and fifth generation Xeon CPUs is particularly tight, with Intel implementing a quota delivery system.A reporter from The Paper confirmed with the supply chain that a knowledgeable source stated that indeed, certain products are experiencing tight supply and require advance submission of market demand forecasts.Global CPU chips are primarily supplied by Intel and AMD. Similarly, AMD is also facing CPU supply tightness. The aforementioned report stated that AMD has also informed customers of the supply constraints, with delivery times for some AMD products extended to 8 to 10 weeks.Informed sources said that the two companies recently issued the above supply notifications to Chinese customers, indicating that the CPU supply shortage issue has further escalated, potentially increasing the production and operational pressure on domestic AI companies and many manufacturing firms.The logic behind CPU shortages and price increases is similar to that of storage chips, as the continuous investment in artificial intelligence infrastructure, especially the significant demand for inference computing, has greatly increased the need for traditional computing CPU chips. Intel and AMD are shifting their products towards the AI field, leading to a chip shortage for consumer-grade terminals.Intel pointed out in its earnings call in January that there are limitations in CPU supply. The first-quarter performance guidance provided by Intel fell short of expectations, with Intel explaining that due to chip supply shortages, it is difficult to meet customer demand. The main reason is that Intel's own chip manufacturing yield is low, and the proportion of available chip output in factories is insufficient, directly limiting delivery capacity.Intel stated: &#34;We expect inventory levels to be at their lowest in the first quarter, but we are actively taking measures to address this, and we anticipate that supply conditions will gradually improve from the second quarter through 2026.&#34;Similarly, AMD's first-quarter performance guidance was also below market expectations, leading to a significant drop in stock prices. Although AMD has outsourced production to TSMC, the latter has prioritized capacity allocation for AI chip manufacturing, leaving very limited capacity for CPUs.However, AMD stated that it has increased supply capacity to meet strong market demand. The company expressed in a statement to foreign media: &#34;Based on our strong supplier agreements and supply chain established with partners like TSMC, we are confident in our ability to meet customer demand globally.&#34;In addition, the shortage of memory chips, which are key components of servers, has also played a role in exacerbating the situation. Distributors of server CPUs and memory products have indicated that after memory prices began to rise in the Chinese market at the end of last year, customers accelerated their CPU procurement to lock in lower memory prices.Risk Warning and DisclaimerThe market carries risks, and investments should be made with caution. This article does not constitute personal investment advice and does not take into account the specific investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. Investing based on this is at one's own risk

On October 26th, after the U.S. stock market closed, chip giant Intel released its Q3 2023 financial report. The report showed that Intel's total revenue in the third quarter fell 8% year-on-year to $14.16 billion, marking the seventh consecutive quarter of declining sales, although it was still higher than the market expectation of $13.53 billion. In the second quarter, revenue had previously dropped 15% year-on-year, and the company expects revenue to return to growth in the fourth quarter. However, the sales of the Network and Edge Group (NEX), which includes IoT and other segments, fell 32% year-on-year to $1.5 billion. More importantly, the server chip division, named "Data Center and Artificial Intelligence," has yet to recover growth, with third-quarter revenue declining 10% year-on-year to $3.8 billion. Facing multiple competitive pressures, do you think Intel can turn the tide in the AI era?

On October 26th, after the U.S. stock market closed, chip giant Intel released its Q3 2023 financial report. The report showed that Intel's total revenue in the third quarter fell 8% year-on-year to $14.16 billion, marking the seventh consecutive quarter of declining sales, although it was still higher than the market expectation of $13.53 billion. In the second quarter, revenue had previously dropped 15% year-on-year, and the company expects revenue to return to growth in the fourth quarter. However, the sales of the Network and Edge Group (NEX), which includes IoT and other segments, fell 32% year-on-year to $1.5 billion. More importantly, the server chip division, named "Data Center and Artificial Intelligence," has yet to recover growth, with third-quarter revenue declining 10% year-on-year to $3.8 billion. Facing multiple competitive pressures, do you think Intel can turn the tide in the AI era?

In the AI era, can Intel win a comeback?

INTC

Intel and AMD have notified Chinese customers that there is a supply shortage of server central processing units (CPUs), and delivery times may be extended to six months. The tight supply has led to a price increase of over 10% for Intel server products in the Chinese market. The Chinese market accounts for more than 20% of Intel's total revenue, with supply particularly tight for the fourth and fifth generation Xeon CPUs, prompting Intel to implement a quantitative delivery system. Some products require advance submission of market demand forecasts

- The demand for artificial intelligence is creating a significant supply shortage of CPU chips, announced by Intel and AMD to Chinese customers.  
- This shortage is causing prices for Intel's server products in China to rise by over 10%, with delivery delays potentially extending up to six months.  
- Both companies are prioritizing AI-related production, limiting supply for consumer-level chips, and indicating that the situation may improve gradually by 2026.

Wallstreetcn

Intel

CPU supply shortage escalates, Intel and AMD reportedly inform Chinese customers of extended delivery times